Ukranian Bitcoin Miners Expose Dangerous Flaw In Bitcoin Pyramid
Bitcoin as a viable currency in the online gambling world is catching on. We reported on Bitcoin online casinos like Satoshi Live and now even social gaming companies like Zynga are testing bitcoin as a playing option. It seems that bitcoin is creating the same hype as the dot-com craze did. This has led to many asking the question of just how volatile the virtual currency really is?
This week there was a worrying story about the largest collective of bitcoin miners, GHash.io who managed to gain control of more than 42% of the entire processing power needed to run the Bitcoin network.
In short the process of bitcoin mining requires huge computer power and the result is many people having to pool their resources together. GHash.IO is one of the largest collectives but the fact that they approached the 50% threshold resulted in a scenario that many fear could bring down the entire bitcoin network.
The entire process of bitcoin mining is to ensure that the bitcoin transactions are confirmed and that no duplicate transactions are the same. The process is complicated and involves deciphering codes of numbers and letters which are then rewarded with bitcoins to the “miners”. With GHash.IO approaching the 50% threshold it is theoretically possible that there will not be enough independent miners to verify transactions. This could result in them confirming false transactions or even blocking them entirely.
The good news is that Bitcoin is based on a tight knit community network and as soon as they realized that GHash was controlling too much, individual members of the collective removed their computers from the pool which resulted in the hashing power going down to more acceptable levels. GHash themselves are shrouded in mystery. Although they are known to work out of the Ukraine the management is largely unknown. They also announced that they would take all the necessary precautions to ensure the stability of the Bitcoin network by ensuring that they do not reach the 51% threshold which is considered a red line.
There is no doubt the bitcoin phenomenon will keep the gaming world entertained as many have pointed out that the risk and rewards of trading in this virtual currency are the ultimate gambling thrill.